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Types of Lease Agreements | Real Estate Exam Prep Videos - YouTube
Channel: The Real Estate Classroom
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hi everyone my name is Paul V Chesky and
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welcome to the real estate classroom
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youtube channel real quick do me a favor
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give this video a thumbs up hit that red
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subscribe button and click on that
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little notification bell and today's
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video we're going to discuss the
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different types of leases that you need
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to know for your real estate licensing
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exam alright so there's eight different
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types of leases that you need to know
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for your exam so let's take a look at
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each one of them alright so let's start
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out with the net lease now the net lease
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is sometimes called a triple net lease
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because in a net lease the tenant is
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gonna pay a monthly or quarterly rent or
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however the rent schedule is set up plus
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there are three other items that they're
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gonna pay in addition to them to the
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rent and that is going to be they'll be
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responsible for maintenance property
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taxes and also the property insurance so
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they're gonna pay those three items in
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addition to utilities as well net lease
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is sometimes called a triple net lease
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and again you need to know that those
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are used interchangeably for the real
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estate licensing exam the next one I
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want to talk about is a gross lease now
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a gross lease is typically used in
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residential settings alright that's the
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first thing
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apartments and single-family homes and
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those type of things and typically with
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the gross gross lease it's just one rent
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payment at the beginning of the month
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and that's it it's just monthly rent and
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then the owner is responsible for paying
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things like taxes and insurance now
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under a gross lease the tenant may or
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may not have to pay utilities that's
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going to depend on the specific unit
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that's actually being rented out so we
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see these at residentially zoned type
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properties and by the way I forgot to
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mention net leases we typically see in
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commercial type settings the next lease
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I want to talk about is a percentage
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lease now
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percentage leases what's typically used
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in retail establishments such as malls
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and things like that and the tenant is
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going to typically pay a monthly rent
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plus a certain percentage of gross sales
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and it's important to know that it's
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gross and not net that's a key point
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you're gonna have to know in particular
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for brokers exams I have had students
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say that we're taking their brokers exam
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make reference to that so it's a certain
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percentage of gross sales and typically
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what the percentage lease we see that in
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retail outlets all right the next lease
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I'm going to talk about is what's called
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a sandwhich lease now we see sandwich
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leases when there is a sub tenant now I
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I did a video where I discussed
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assignment of leases and subleasing or
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sometimes called subletting if there's a
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subletting situation this is when we're
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going to see the sandwich lease come
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into play here and if you want more
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information on that particular on that
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particular topic right up here and your
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upper right-hand corner of your screen
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is a little I click on that and I'll
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provide a link to that particular video
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but here's what a sandwich lease looks
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like so we have the original lessor now
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remember the lessor is the landlord okay
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then the landlord rents it to the lessee
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which is the tenant now what happens is
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the tenant then turns around and leases
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the property to the sub tenant or the
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sub lessee and so what happens is this
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creates a sandwich where the the lessee
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the tenant is sandwich in in the middle
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all right so that's when we would see a
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sandwich lease the next lease I want to
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talk about is a graduated lease now with
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a graduated lease you may see this in
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office communities or office parks or
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office space you could see it in certain
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types of commercial space as well but
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it's a it's a it's a rent a flat rent
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fee and then is
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throughout let's say it's a three-year
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lease or a five-year lease what's going
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to happen is through periodically
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throughout that lease there's going to
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be rent increases on stated time periods
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alright so we might have a situation
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where rent is a thousand bucks a month
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then on the one-year anniversary it goes
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up to twelve hundred and fifty on the
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second anniversary it goes up to fifteen
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hundred bucks it is it's expressed in
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the lease contract itself and it's a
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definite amount of rent there's it's not
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tied to any kind of index or anything
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like that it is just a stated amount of
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rent increase in a stated period of time
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which is a little bit different that an
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index lease an index lease is something
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that we're that the tenant is going to
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pay rent plus there will be rent
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increases over the life of the of the
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lease agreement but it's attached to
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some kind of index such as the Consumer
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Price Index CPI for example is one that
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is used quite often and so just like the
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graduated lease maybe it's on the
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one-year anniversary's the rents go up
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but unlike the graduated lease where it
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is a stated specific amount of money
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that the increase is going to be the
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increase is based on that index so if
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the CPI goes up one percent then that's
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going to be what the with the rent
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increase is going to be on that annual
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anniversary all right so it's a little
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bit different and then the the last two
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ground leases ground leases we typically
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see with in recreational or campsites so
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if you have a camper and you want to
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rent out a pad at a campsite that's what
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we'd see a ground lease all right and
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then the last one is what we call a sale
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lease back sale lease backs aren't that
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common but there's still something you
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need to know for your real estate
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licensing exam and this is where we have
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the the buyer and the seller all right
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the buyer purchased the property from
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the seller and it goes to closing and
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then immediately upon closing the seller
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they leased back the property for a
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specific period of time we don't really
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see it too much in the residential side
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other than like post occupancy z' where
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it's just a couple of days this is more
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common in the commercial side of things
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where it's more long-term and it's a
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mechanism I won't go into details in
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this video but it is a mechanism where a
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seller can sell the property raise funds
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because they need the money for maybe a
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different product line for example and
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then they turn around and lease that
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property back and the idea is with based
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on the product line that they're opening
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up there's a chance that they're gonna
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outgrow the current space anyways and so
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it kind of gets them out from underneath
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the property it allows them cash or cash
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flow so they can start a new product
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line with the anticipation and at some
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point they're gonna move the operations
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to a bigger place in the future so
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that's a sale-leaseback okay those are
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the eight types of leases that you're
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going to need to know for your real
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estate licensing exam real quickly
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you're going to continue to study check
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